Involuntary Dissolution
A corporation may be dissolved by the SEC motu
proprio or upon filing of a verified complaint by any
interested party. (Sec. 138)
Grounds for dissolution of the corporation:
a. Non-use of corporate charter;
b. Continuous inoperation of a corporation;
c. Upon receipt of a lawful court order dissolving the
corporation;
Involuntary Dissolution
d. Upon finding by final judgment that the
corporation procured its incorporation through fraud;
e. Upon finding by final judgment that the
corporation:
i.
Was created for the purpose of committing, concealing or aiding
the SEC of securities violations, smuggling, tax evasion, money
laundering, or graft and corrupt practices;
ii. Committed or aided in the SEC of securities violations,
smuggling, tax evasion, money laundering, or graft and corrupt
practices, and its stockholders knew of the same; and
iii.
Repeatedly and knowingly tolerated the SEC of graft and
corrupt practices or other fraudulent or illegal acts by its directors,
trustees, officers, or employees. (Sec. 138)
LIQUIDATION
Corporate Liquidation (Sec. 139)
Every corporation (except banks) whose charter expires
pursuant to its articles of incorporation, is annulled by
forfeiture, or whose corporate existence is terminated in any
other manner, shall nevertheless remain as a body
corporate for three (3) years after the effective date of
dissolution, for the purpose of prosecuting and defending
suits by or against it and enabling it to settle and close its
LIQUIDATION
affairs, dispose of and convey its property, and distribute its
assets, but not for the purpose of continuing the business
for which it was established.
Except by decrease of capital stock and as otherwise
allowed by this Code, no corporation shall distribute any of
its assets or property except upon lawful dissolution and
after payment of all its debts and liabilities.
LIQUIDATION
• The expiration of the 3-year period does not mean that
the pending case will be terminated.
• If full liquidation can only be effected after the three-year
period and there is no trustee, the directors may be
permitted to complete the liquidation by continuing as
trustees by legal implication. (Clemente v. CA, 242 SCRA
717)
LIQUIDATION
•
There is no time limit within which the liquidation should
be completed in the hands of the trustees. (Viguilla v. Phil.
College of Criminology, G.R. No. 200094)
LIQUIDATION
•
If there is still a pending case when the 3-year period to
liquidate expired and there is no trustee that is appointed,
the counsel of the corporation who prosecuted and
represented the interest of the corporation may be
considered a trustee of said corporation with respect to
same case and he can continue to represent the
corporation. (Gelano v. CA, 103 SCRA 90)
Comparison of Jurisprudence
Corporate Action after Dissolution
Can a dissolved corporation pursue its legal
claim?
Corporate Action after Dissolution
In the case of Carlos Gelano, et. al. v The
Hon. Court of Appeals, et. al., G.R. No. L39050, Feb. 24, 1981
YES!
A dissolved corporation can still pursue its
legal claim.
Carlos Gelano, et. al. v. CA
Under the Corporation Law, when the corporate existence is
terminated in any legal manner, the corporation shall
nevertheless continue as a body corporate for three (3) years
after the time when it would have been dissolved.
“It is our view that any litigation filed by or against it instituted
within the period, but which could not be terminated, must
necessarily prolong that period until the final termination of said
litigation as otherwise corporations in liquidation would lose what
should justly belong to them or would be exempt from the
payment of just obligations through a mere technicality,
something that courts should prevent.”
Comparison of Jurisprudence
In the case of Alabang Devt. Corp. v Alabang Hills Village Asso.,
et. al., G.R. No. 187456, June 2, 2014
NO!
A dissolved corporation can no longer pursue its legal claim.
Alabang Devt. Corp. v. Alabang Hills Village Ass.
Petitioner filed its complaint not only after its corporate
existence was terminated but also beyond the three-year period
allowed by Sec. 122 (now Sec. 139 RCC)of the Corporation
Code. Thus, it is clear that at the time of the filing of the subject
complaint petitioner lacks the capacity to sue as a corporation.
To allow petitioner to initiated the subject complaint and
pursue it until final judgment, on the ground that such complaint
was filed for the sole purpose of liquidating its assets, would be
to circumvent the provisions of Section 122 of the Corporation
Code.
Case Comparison
In the Gelano case, the Court ruled that a
dissolved corporation can still pursue its legal
claim.
In the Alabang Devt. Corp. case, the Court ruled
that a dissolved corporation can no longer pursue
its legal claim.
The Court’s Ratio Decidendi
In the Gelano Case, the corporation filed
the case before its dissolution although
the case was terminated after its
dissolution.
In the Alabang Devt. case, the suit was
filed long after the corporation was
dissolved.
Foreign Corporation Personality to Sue and Suability
General Rule: unlicensed foreign non-resident corporations
cannot file suits in the Philippines.
Legal Basis: No foreign corporation transacting business
in the Phlippines without a license, or its successors or
assigns, shall be permitted to maintain or intervene in any
action, suit or proceeding in any court or administrative
agency of the Philippines, but such corporation may be
sued or proceeded against before Philippine courts or
administrative tribunals on any valid cause of action
recognized under Philippne laws. (Sec. 150 RCC)
Foreign Corporation Suing in the Philippines
Can a foreign corporation doing business in the
Philippines without a license sue in Philippine Courts?
(European Resources and Technologies, Inc. v. Ingenieeuburo
Birkhahn + Nolte, 479 Phil. 114, 124 (2004))
NO!
A foreign corporation doing business in the
Philippines without a license cannot sue in Philippine
courts.
European Resources v. Ingenieuburo BIrkhahn
A corporation has a legal status only within the state or territory in
which it was organized. For this reason a corporation organized in
another country has no personality to file suits in the Philippines. In
order to subject a foreign corporation doing business in the country
to the jurisdiction of our courts, it must acquire a license from the
SEC and appoint an agent for service of process. Without such
license, it cannot institute a suit in the Philippines.
To rule that the German Consortium has the capacity to institute
an action against petitioners even when the latter have not
committed any breach of its obligation would be tantamount to an
unlicensed foreign corporation gaining access to our courts for
protection and redress.
European Resources v. Ingenieuburo BIrkhahn
We have held that the act of participating in a bidding
process constitutes doing business because it shows the
foreign corporations intention to engage in business in the
Philippines. In this regard, it is the performance by a foreign
corporation of the acts for which it was created, regardless
of volume of business, that determines whether a foreign
corporation needs a license or not.
We cannot allow this without violating the very rationale
for the law prohibiting a foreign corporation not licensed to
do business in the Philippines from suing or maintaining an
action in Philippine courts.
Foreign Corporation Suing in the Philippines
Global Business Holdings, Inc. v Surecomp Software, B.V.,
G.R. No. 173463 October 13, 2010.
YES!
A foreign corporation doing business in the
Philippines without a license can sue in Philippine
courts.
Global Business v. Surecomp Software
A foreign corporation doing business in the Philippines
without license may sue in Philippine courts a Filipino
citizen or a Philippine entity that had contracted with and
benefited from it. A party is estopped from challenging the
personality of a corporation after having acknowledged the
same by entering into a contract with it.
The principle is applied to prevent a person contracting
with a foreign corporation from later on taking advantage of
its noncompliance with the statutes, chiefly in cases where
such person has received the benefits of the contract.
The Court’s Ratio Decidendi
In the European Resources case, the Court applied
the general rule that a foreign corporation doing business
in the country must acquire a license from the SEC.
Without such license, it cannot institute a suit in the
Philippines.
In the case of Global Business Holdings, the court rule
that a party is estopped from challenging the personality
of a foreign corporation after having acknowledged the
same by entering into a contract with it.
tapos na po!